When is the settlement collected and how to calculate it?

calculate the settlement

Did you know that, as an employee, you have the right to collect a settlement ? Yes, it does not matter if you have been fired, if you have voluntarily terminated or if the contract has ended, you have the right to receive a settlement from the company, once the employment relationship is broken .

If you want to know the details, we will tell you when the settlement is collected and how to calculate it , so you will know how much money you are entitled to if you stop working in a company.

What is and when is the settlement collected in United States?

The settlement is a document that reflects the amount of money that the worker must collect when he is fired or when his employment contract ends . This includes the salary accrued for the month of dismissal, vacations not taken, extraordinary pay and compensation (if applicable).

It is important to highlight the difference between severance pay and severance pay , as many tend to think that they are the same thing. To make it easier for you to see, the settlement is always given, whatever the cause of the end of the employment relationship, while compensation only applies if you have been dismissed improperly or for objective reasons.

In summary, the settlement corresponds to the pending accounts that the company has with the worker and is charged once the professional relationship ends.

Types of settlement

There are different types of severance pay in the United States that differ according to the reason for termination of employment, whether due to dismissal, voluntary dismissal or end of contract .

Termination for dismissal

In this case, the employment relationship may end due to disciplinary dismissal, objective dismissal or collective dismissal and force majeure . Dismissal may be appropriate , when justified by negligence, unpunctuality, bad attitudes, etc., or inappropriate , when it is not possible to demonstrate the reason for dismissal.

How to calculate a settlement infographic

It should be noted that the type of dismissal directly affects the amount of the settlement , since the amount of compensation varies.

Liquidation for voluntary withdrawal

Just as he can be fired, the worker can decide to leave the company of his own free will. When this is the case, the compensation is not taken into account for the calculation of the settlement .

End of contract settlement

The professional relationship may also end due to the termination of the temporary contract. The compensation corresponds in this case, provided that the end of the contract does not occur as a result of a disciplinary dismissal or voluntary dismissal.

How is the settlement calculated in the United States?

When calculating your settlement, you must add the following concepts:

  • The salary earned for the month of dismissal , equivalent to the days worked that month.
  • The proportional part to the extraordinary payments that you have not received and correspond to you by contract.
  • The vacations generated and not enjoyed to date.
  • Severance pay , which is generally equal to 45 days per year worked but varies depending on the type of layoff.

To better understand how the settlement is calculated in the United States, let's look at the following example.

Example of calculation of a settlement

María has been working for a furniture company for 1 year and has been fired for reduction of staff on April 15, 2020. Her monthly salary was the equivalent of € 1,000 with two extra payments of € 1,000 each and to date she has enjoyed 5 days of vacation of the corresponding 30 days per year worked.

With these data, the calculation of the settlement is done as follows:

  • Earned salary

(€ 1,000 / 30 days) * 15 days worked = € 500

  • Proportional part of the extra payments

Taking into account that the Christmas bonus is accrued on January 1 of the current year and the summer payment is accrued in July of the same year, Maria is only entitled to the Christmas payment.

Christmas = (€ 1,000 / 365 days) * 105 days elapsed since December = € 287.67

  • Holidays generated and not enjoyed

(30/365) * 105 days worked in 2020 - 5 days consumed = 3 days of vacation.

3 days * € 33.33 / day = € 100

  • Severance for objective dismissal

The target severance pay is equivalent to 20 days of salary per year, so:

(20 days * 1 year worked) * € 33.33 / day = € 666.6

  • Settlement amount

Earned salary + extra pay + vacations + compensation

€ 500 + € 287.67 + € 100 + € 666.6 = € 1,554.27 OF FINIQUITO

How long does the company have to pay the settlement?

The law does not stipulate a fixed term for companies to pay the settlement , although they must do so as soon as possible. However, in the case of severance pay for dismissal or end of contract, it is common for companies to deliver it together with the dismissal letter .

On the other hand, in the case of the voluntary termination settlement, it is usually delivered on the last day of work , unless prior notice has been made, which may take a little longer.

However, companies must deliver the settlement at the end of the employment relationship, otherwise, they will be paying late.

What can I do if the company does not want to pay?

If the business refuses to pay, it is advisable to claim the amount owed through recorded phone calls, emails, and in person . If the company ignores it, you have up to 1 year to file your claim , from the day you stopped working. In the case of the layoff claim, you have only 20 business days.

To claim, you must first submit a conciliation ballot . If the company does not pay, then you can proceed with the lawsuit . In addition, you have the right to demand a 10% interest rate , as established by the Workers' Statute.

Now, if you are urgent to receive the money and the process continues to take time, you can opt for a personal loan to improve your liquidity . Thus, if you need a low amount of money, you can resort to microcredits , which are granted instantly and without paperwork. On the other hand, if you need a higher amount, you can opt for installment loans and pay them back in months or even years.

If you are interested, at taichi-arts.com we compare the best offers on personal loans so that you can find the one that best suits you.

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